DTN Before The Bell-Livestock

GENERAL COMMENTS

Moderate to strong support is seen in all livestock trade with hog futures surging higher following the announcement Saturday that U.S and China has agreed in a trade cease-fire as they continue to move down the road to develop an agreement. Cattle futures are posting strong support following increased pressure in corn trade. Corn markets are lower in light trade. Stock markets are higher. Dow Jones is 251 points higher with NASDAQ up 126 points.

LIVE CATTLE:

Open: Steady to 80 higher. Firm gains quickly moved into all live cattle trade Monday morning following triple-digit support in feeder cattle. Although the results of a trade war "cease-fire" with China most directly affects the hog complex, any improvement in trade relations will have a benefit to the cattle complex also. Moderate gains are seen early Monday, but the potential to build on early-week support during the holiday-shortened trading week could help to solidify additional interest over the next few days. Cash cattle trade is expected to remain sluggish with inventory taking and show list distribution the main focus through the entire complex. Open interest Friday lost 395 positions (350,331). Spot month August contracts lost 2,530 positions (140,384) and October contracts added 2,261 positions (100,932). DTN projected slaughter for Monday is 121,000 head.

FEEDER CATTLE:

Open: $1 to $2 higher. Active buyer support is quickly moving back into feeder cattle trade following another sharp loss in corn futures. This renewed support is seen following a bearish USDA crop report Friday which put into question millions of acres that may or may not be planted this year. This has quickly limited previous grain market support, and the lower cost of production from feed prices is helping feeder cattle traders flood back into the complex. Cash index for 6/27 is $132.61 up $0.76. Open interest Friday fell 571 positions (49,928).

LEAN HOGS:

Open: $1 to $2 Higher. Sharp morning gains have flooded into lean hog futures trade following Saturday's announcement that a cease-fire has been declared in the trade war with China. Although long-term direction still remains ill-defined, the potential for hope that additional talks will produce positive results to the yearlong trade issues has sparked aggressive buyer support through the entire complex. Cash hog trade is called steady to $2 lower, with most bids 50 cents to $1 lower. Open interest fell 404 positions (295,332). July fell 1,459 positions (21,569) and August lost 785 positions (84,268). Cash lean index for 6/27 is $76,05, down 1.21. DTN projected slaughter for Monday is 460,000 head. Saturday runs are expected at 190,000 head.

Rick Kment can be reached at rick.kment@dtn.com

(CZ)

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